Daybreak - How a well-timed offensive crippled Juspay’s $150 million fundraise

Episode Date: June 3, 2025

Indian finserv is no koi pond. It's a shark tank. And now, some of the biggest sharks in the tank – payment aggregators like Phonepe, Razorpay, Cashfree and Paytm – are all narrowing in on the aggregator of aggregators, Juspay. In this episode, we go behind the scenes of one of the biggest fintech standoffs of the year. On one side are the aggregators, who power payments for millions of online merchants. And on the other side is “aggregator of aggregators” Juspay, who’s worked as an extension of merchants’ payments teams, helping them coordinate payments across aggregators, for over a decade. Tune in. Check out our latest episode featuring Soumya Rajan, founder and CEO of Waterfield Advisors, India’s largest multi-family office and wealth advisory firm.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.Listen to the latest episode of Two by Two here

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

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Indian Fincerve is no co-a-pond. It is a full-blown shark tank. And now, some of the biggest sharks in the tank, and by that I mean payment aggregators like phone pay, razor pay, cash-free, and pay-tm, are all narrowing in on the aggregator of aggregators just pay. In this episode, we go behind the scenes of one of the biggest Pintech standoffs of the year. On one side are the aggregators who power payments for millions of online merchants.

And on the other side is Jaspay, who's worked as an extension of merchants' payment teams helping them coordinate payments across aggregators for over a decade. Now, Jaspé helps more than 500 of India's biggest internet companies, processed nearly 200 million transactions a day. Think Misho, Big Basket, Zepto, IRCTC, Swiggy. Collectively, that's roughly a third of all the digital transactions in India. So, Jaspi is no small fish. It's among the biggest of sharks in the fintech tank.

For a while, things were fine. Payment aggregators and orchestrators like Jaspi tolerated each other. After all, merchants needed both of them. They couldn't do without the aggraves. but at the same time, they needed the likes of Justpe to juggle them effectively. Justpe was essentially the middleman that let merchants play aggregator bingo, while it optimized for things like uptime fees and success rates. So the aggregators had scale, but just pay had leverage.

Then in early 2024, just pay went ahead and upended that working dynamic by going and getting a payment aggregator license for itself. existing payment aggregators were actually annoyed and ended up launching somewhat of a quit just pay movement. We saw a whole set of companies turning on one entity and that's a pretty rare occurrence, even in this rather brutal shark tank. So what happened to Just Pay? Well, the aggregators all out offensive ended up watering down its funding.

It recently raised a 60 million series D round from private equity firm Kidara Capital at a valuation just shy of $1 billion. Now, that's significantly lower than the $150 million it had planned to raise initially. The next national question is, how will this play out? Well, let's find out from the three parties involved. The aggregators, the investors and the merchants themselves. Welcome to Daybreak, a business podcast from the Ken. I'm your host Rahil Filippos and I don't chase the new cycle.

Instead, every day of the week, my colleagues, Nikaa Sharma and I will come to you. with one business story that is worth your time and worth understanding. Today is Wednesday, the 4th of June. Back in December, phone pay announced that it was all set to discontinue engagement with third-party orchestrators. Both merchants and its investors were pretty surprised. And this was when the dominoes really started to tumble. My colleague Arundati Ramatan spoke to a payments executive at a large internet company who said it became pretty apparent that phone pay was not the only one.

They started to hear from other pay aggregators that more would come. And surely enough, razor pay and cash-free followed suit in January. Then Ptm went ahead and jumped on the bandwagon just a couple months later. Around the time this started, back when phone pay made its announcement, Just Pay was just about to seal the deal on its latest fundraise. There was about $150 million on the table from investment firms like Kedara Capital, Warburg Capital and Westbridge. This was a big one because if things went to plan, it would have comfortably made JustPay a unicorn. Unfortunately, things didn't end up going to plan.

Most of the investors originally on board for the fundraise decided to pause their investments. Kedara eventually went ahead and invested the originally committed $60 million in April. Now, this deal was meant to be a big one for Kedara. It was its first big investment in the space and it was meant to give it ringside seats to the bustling, the same-in story that's unfolding in India. Unfortunately, the happy ending to the story seems to be quite a while away, if at all. It hardly helped that venture capital firm peak 15, Razorpe's lead investor, was also in conversation with Just Pay's incoming investors about what Razorpe's position was likely to be.

Because if Razor Pay were all set to follow Phone Pay into battle, it would be a major setback for Just Pay. And investors wanted to know just how likely that was. was. Now we all know how that ended. Raiser pay joining the quit Just Pay movement was an inevitability. The result? Well, apart from falling millions short of what could have been raised, Jasper also had to defend its business. Not a lot of people would have seen this coming, especially since the company saw its revenue jump 50% to reach 320 crore in FY24.

But the payment aggregator saved, this was hardly a surprise. One Razor Pay executive Arnodity spoke to said they had previously warned Just Pay more than six months ago that if it continued promoting its own payment aggregator over others, well, that could impact their partnership. Just Pay, of course, says that didn't happen. The spokesperson for the company explained how it was counterintuitive for a payment aggregator who operates their own orchestration solution to express concerns about another orchestrator's payment aggregator license. But now you're probably wondering, where does that leave the merchants?

Well, stay tuned to find out. It has been a tough few months for merchants. For a while, they actually believed there was a way back from all of this, that one of the aggregators would finally backtrack. But now they realize that's not going to be happening anytime soon. Meanwhile, aggregators like Visa Pay say they are confident of retaining 80% of their merchants. Just pay, however, insists that all its merchants, aren't going anywhere. Naturally, only one of those two things can be true. Now, this is where

merchants hope the RBI will step in. They can learn that the regulator has unofficially asked questions about the situation, but both sides believe that they have what it takes to convince the regulator of their side of the story. So, where does that leave the merchant? Well, they have multiple choices, but all come with their drawbacks. They could continue to to work with JustPay and call it quits with Razor Pay and the others, but merchants don't want to take that chance. Then they could integrate directly with the aggregators that are pulling out. But this would set them back years and does not solve their need for having a failsafe.

Or they could use another orchestrator. But that opens up the same issues as now. The last option is deploying JustPay's new open source orchestrator on their servers. or building their own orchestrator. So clearly, each choice would end up costing them. In the end, it may come down to the fact that Jaspi just has a deeper relationship with these merchants. The payments head of an e-commerce company, Arunditie spoke to, said it was sort of like a friend, while the countless other aggregators were essentially like friends or friends.

The biggest drawback for working directly with aggregators is that it could work out far more expensive. The merchants would have no leverage over aggregators and would then be forced to take their solutions at higher costs. As the payment head of the e-commerce company put it, having Just Pay as a partner brought down the profitability of the whole PA ecosystem. Now, this has been a long time coming. Usually, it's large companies processing millions of transactions a day that need a solution like Just Pay. But increasingly, small companies that started going the Just Pay route to curtsy of people, the ease of outsourcing the payment problem to a third party for a very small price. This had raised alarm bells for other payment aggregators.

The other big advantage that Justpe had was data. Now, payment aggregators were concerned that Justpe had access to way more merchant data than they did. This data helped Justpe ensure the merchants always came out on top. One way this manifested was merchants always got the lowest and best prices. and in the process, Justpay became the kingmaker of payment aggregators. Now, that's what ended up being Justpe's undoing, because it gave merchants a lot of power, which ended up making PA's feel quite uncomfortable.

Just pay getting a PA license was the final straw. Things really spiraled when it started pitching its PA to 30 or 40 of its own merchants. Justpe's defense in all of this was pretty simple. It processed only 0.02% of payment. volumes through its aggregator and was not meant to be a competitor. But as both sides now raised to retain their share of merchants, this fight is not just about who has a better product or pricing. It's about who has the better narrative.

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Today's episode was hosted by Rahil Filippos, produced by Meekh Dha Sharma and edited by Rajiv Sien.